Procedure of Company Registration

The form of organization created affects all aspects of a company's activities including transactions, tax consequences, financial and accounting, the ability to hire foreign nationals, repatriation of income and the application of international agreements etc therefore when incorporating a company in Russia special attention should be paid to the organizational and legal structure.

There are several possible forms of legal entity that a foreign investor can choose when incorporating a company in the Russian Federation. A legal entity may be registered in the form of a Limited Liability Company, Joint Stock Company (which may be open or closed) or a Partnership. Representative Offices or a branch of a Foreign Company may also be registered in Russia.

Legal entities in the Russian Federation:

Limited Liability Company (LLC) & Joint Stock Company (JSC)

Both LLC & JSC may exercise any form of commercial activity which is not prohibited by Russia Law. Licenses may however require to be obtained depending on the type of activity the company wishes to carry out.

The number of shareholders / participants should not exceed 50. For Public JCS there are no limits on the number of shareholders / participants.

The minimum number of shareholders is one.

The founders / shareholders of a LLC and JSC can be Individuals, Russian or Foreign Companies.

The Annual General Meeting should be held annually. The company may be run by the Individual Executive (The General Director) or by the Collegiate Authority (The Board)

The Tax Authorities register companies the details of which are then registered in the United State Register

A LLC and PJSC must also be registered with the State Committee for Statistics, Pension Fund, Insurance Fund and Social Insurance Fund.

The authorized capital is divided into shares / units which represent the rights and obligations of a shareholder / member in accordance with their shareholding in the authorized capital

Quarterly reports must be submitted to the tax authorities.

Branches and representative offices of foreign companies

A Representative Office and Branch of Foreign Entity are not separate legal entities but rather the unit of a foreign company. A Representative Office is a division of a foreign entity that has no right to engage in commercial activities in Russia whilst a Branch, although still a foreign entity, is permitted to engage in commercial activities.

Both Branches and Representative Offices must be registered with the Tax Authorities, the state Statistics Committee, the Pension fund, Insurance Fund and Social Insurance Fund.

There is no minimum capital requirement needed to create a Representative Office. Branch Offices are formed in accordance with legislation which requires an input of capital but the amount is not stipulated.

The Executive Authority should be appointed as a foreign entity in both the Branch and Representative Office.

In respect of taxation, there is little difference between the Branch and a Russian Legal Entity.

Representative Office entities are required to report their activities and any resulting income to the relevant authorities.